Interferon-gamma (IFN-gamma) was induced from a human peripheral mononuclear fraction by incubation with a streptococcal preparation stabilized with penicillin G (OK432). This IFN-gamma-producing activity was significantly reduced in patients with chronic hepatitis and hepatocellular carcinoma. In patients with liver cirrhosis it was also reduced but not significantly. Serum hepatitis B virus DNA and skin tests for the purified protein derivative of tuberculin, phytohemagglutinin-P and a polysaccharide fraction prepared from streptococcus pyogenes Su strain were determined to have no significant relation to this IFN-gamma-producing activity. Although the addition of interleukin 2 (IL-2) to the culture medium enhanced the IFN-gamma-producing activity, there was no difference in this enhancement between normal control and chronic hepatitis. Therefore reduction of the IFN-gamma-producing activity observed in chronic hepatitis seems to be caused by a decreased number of IFN-gamma-producing activity cells or hypofunction of these cells or both. Since HBeAg became negative in patients whose IFN-gamma-producing activity was increased by the administration of the immunopotentiator OK432 or IFN-beta, the IFN-producing system in the patients with B type hepatitis may contribute to the elimination of HBV. Adenine arabinoside suppressed IFN-gamma-producing activity both in vivo and in vitro.